IRS Insights, published by the Deloitte Tax LLP Tax Controversy Services group, provides a compact, reader-friendly perspective on the latest practices and procedures coming out of the Internal Revenue Service (IRS), as well as the potential impact of changes on taxpayers.

Subscribe to receive IRS Insights directly via e-mail.

May 2009
No settlement agreement due to lack of authorized signature and mutual assent

• No settlement agreement due to lack of authorized signature and mutual assent – In a recent decision, the Tax Court addressed the issue of whether the IRS and the taxpayers entered into a binding settlement agreement where the agreement was signed by the taxpayers, but not the IRS. The Tax Court found that there was no binding agreement because the document was not signed by an authorized IRS representative and there was no mutual agreement on the essential terms.
• IRS refunds $50,000 because it was a deposit, and not an estimated tax payment – Recently, a U.S. District Court granted the taxpayer’s motion for summary judgment, and held that the IRS must refund a $50,000 remittance. The case turned on whether the taxpayer’s remittance of $50,000 should be classified as a payment or as a deposit. If the remittance was a payment, the taxpayer’s claim for refund would have been barred by the statute of limitations. The District Court concluded, based on the “totality of the circumstances”, that the payment was a deposit and not an estimated tax payment.
• Tax Controversy Updates: Tax accrual workpapers and work product privilege – Recently the U.S. Court of Appeals for the First Circuit ruled that a company’s tax accrual workpapers, which were prepared by in-house attorneys, were protected by the work product privilege. Subsequently, the First Circuit issued an order granting the government’s motion for en banc review on the issue of privilege for tax accrual workpapers. The en banc hearing is scheduled for June 2, 2009.
• Tax Controversy Updates: Like-kind exchange between related persons was structured to avoid tax – In a recent decision, the U.S. Tax Court held that a taxpayer’s participation in a like-kind exchange with a related person was structured to avoid Federal income taxes. The court found, however, that the taxpayer was not liable for an accuracy-related penalty under Section 6662 because the taxpayer reasonably relied on its accountant and acted in good faith.
• Recent Guidance: Expansion of scope of foreign bank and financial accounts reporting rules (Form TD F 90.22-1) – Recently, the Treasury Department expanded the scope of the foreign bank account reporting rules for calendar year 2008 and forward. Generally, A U.S. person who has a financial interest, signature authority, or other authority over any foreign financial accounts is required to file Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (commonly referred to as the “FBAR form”), if the aggregate value of all accounts attributed to the taxpayer exceeds $10,000 at any time during the calendar year.
• Recent Guidance: IRS explains extended NOL carryback for small businesses – The IRS issued a revenue procedure and a question-and-answer document March 16 explaining the temporary five-year net operating loss (NOL) carryback for small businesses that was enacted in the American Recovery and Reinvestment Act of 2009. Under the stimulus legislation, small business taxpayers with gross receipts of $15 million or less may elect to extend the NOL carryback period for losses arising in 2008 from two years to three, four, or five years.
• Recent Guidance: IRS decides not to renew private debt collection contracts – After conducting an extensive review of the private debt collection program, including the cost effectiveness of the effort, the IRS announced that it will not renew its contracts with two private debt collection agencies.

March 2009
Company’s tax accrual workpapers protected by work product privilege

January 2009
Jurisdiction, once invoked, remains unimpaired

November 2008
Deposit Required with Court of Federal Claims for All Affected Tax Years to Bring Action in TEFRA Case

September 2008
Independent Appraisal Does Not Preclude Imposition of Gross Valuation Misstatement Penalty

July 2008
Tax Accrual Work Papers Protected by Work Product Privilege